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Rio Tinto PLC (NYSE:RIO)
Inventory Turnover
3.14 (As of Dec. 2013)

Inventory turnover measures how fast the company turns over its inventory within a year. It is calculated as cost of goods sold divided by average inventory. Rio Tinto PLC's cost of goods sold for the six months ended in Dec. 2013 was $18,012 Mil. Rio Tinto PLC's average inventory for the quarter that ended in Dec. 2013 was $5,737 Mil. Rio Tinto PLC's inventory turnover for the quarter that ended in Dec. 2013 was 3.14.

Days inventory indicates the number of days of goods in sales that a company has in the inventory. Rio Tinto PLC's days inventory for the six months ended in Dec. 2013 was 28.98.

Inventory can be measured by Days Sales of Inventory (DSI). Rio Tinto PLC's days sales of inventory (DSI) for the six months ended in Dec. 2013 was 19.58.

Inventory to revenue ratio determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue. Rio Tinto PLC's inventory to revenue ratio for the quarter that ended in Dec. 2013 was 0.22.


Definition

Rio Tinto PLC's Inventory Turnover for the fiscal year that ended in Dec. 2013 is calculated as

Inventory Turnover (A: Dec. 2013 )=Cost of Goods Sold (A: Dec. 2013 ) / Average Inventory (A: Dec. 2013 )
=36104 / 5737
=6.29

Rio Tinto PLC's Inventory Turnover for the quarter that ended in Dec. 2013 is calculated as

Inventory Turnover (Q: Dec. 2013 )=Cost of Goods Sold (Q: Dec. 2013 ) / Average Inventory (Q: Dec. 2013 )
=18012 / 5737
=3.14

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

Inventory Turnover measures how fast the company turns over its inventory within a year. A higher inventory turnover means the company has light inventory. Therefore the company spends less money on storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the company may not have enough to meet demand.

1. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.

Rio Tinto PLC's Days Inventory for the six months ended in Dec. 2013 is calculated as:

Days Inventory=Inventory (Q: Dec. 2013 )/Cost of Goods Sold (Q: Dec. 2013 )*Days in Period
=5737/18012*91
=28.98

2. Inventory can be measured by Days Sales of Inventory (DSI).

Rio Tinto PLC's Days Sales of Inventory for the six months ended in Dec. 2013 is calculated as:

Days Sales of Inventory (DSI)=Inventory (Q: Dec. 2013 )/Revenue (Q: Dec. 2013 )*Days in Period
=5737/26660*91
=19.58

3. Inventory to Revenue determines the ability of a company to manage their inventory levels. It measures the percentage of Inventories the company currently has on hand to support the current amount of Revenue.

Rio Tinto PLC's Inventory to Revenue for the quarter that ended in Dec. 2013 is calculated as

Inventory to Revenue=Inventory (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=5737 / 26660
=0.22

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Be Aware

Usually retailers pile up their inventories at holiday seasons to meet the stronger demand. Therefore, the inventory of a particular quarter of a year should not be used to calculate inventory turnover. An average inventory is a better indication.


Related Terms

Inventory, Cost of Goods Sold, Days Inventory, Revenue, Inventory to Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Rio Tinto PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Inventory Turnover 3.364.022.771.216.716.927.416.535.896.29

Rio Tinto PLC Semi-Annual Data

Jun09Dec09Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13
Inventory Turnover 2.913.653.334.003.323.383.223.082.913.14
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